FDIC Community Affairs Staff: Helping Families and Communities Around The NationDuring the past two tax seasons, FDIC Community Affairs Officers and their staffs have been encouraging financial institutions to promote partnerships with organizations that are leading Earned Income Tax Credit (EITC) Campaigns across the country. In addition, the FDIC's Community Affairs staff has worked closely with Volunteer Income Tax Assistance (VITA) sites to provide free help in preparing income tax returns. As a result, tens of thousands of people received assistance with their returns, with many families also receiving an EITC refund. These initiatives are usually coupled with financial education, opportunities to open bank accounts, and information on other resources available to low- and moderate-income families and individuals.

New York Region: As part of the FDIC's ongoing financial literacy outreach programs, the Community Affairs staff encourages participating banks to get involved in EITC campaigns and VITA site development. Volunteers at ten sites in the New York City Metropolitan Area (Fordham Road, South Bronx, Downtown Brooklyn, Bedford Stuyvesant, Sunset Park, Northern Manhattan, Midtown, Harlem, Jamaica, and Jackson Heights) operated by the Community Food Resource Center had prepared 12,200 returns as of the beginning of March. Refunds totaled an impressive $17,408,797. Of this total, $9,107,597 was from EITCs and $2,050,824 was from Child Tax Credits (CTC), a federal tax credit worth up to $1,000 for each dependent child under 17.

The Downtown Brooklyn free tax assistance site was hosted by Independence Community Bank, a Money Smart Alliance Partner. The bank's employees offer ongoing Money Smart classes, and the bank is committed to providing access to banking services and products that can assist low- and moderate-income customers begin to build assets and gain financial freedom.

Official opening of the Independence Community Bank Tax Preparation Center on February 23, 2004.

In Philadelphia, three banks – PNC Bank, Citizens Bank, and Wachovia – joined the Campaign for Working Families' (part of the Greater Philadelphia Urban Affairs Coalition) EITC initiative and adopted 13 of the 16 VITA sites in the city. Volunteers are opening accounts and providing information about Money Smart classes. Three weeks into this year's tax season, the VITA sites were reporting an increase of more than 35 percent in tax returns filed over last year. For eligible Philadelphia workers, the EITC averages $1,709.

San Francisco Region: VITA is an integral part of the San Francisco Community Affairs Program's comprehensive outreach strategy to develop sustainable asset-building programs in underserved neighborhoods. The success of the VITA program is a result of ongoing Money Smart delivery systems and partnerships that have been established since Money Smart was introduced.

In the San Francisco Bay Area, an Earn it! Keep It! Save It! Coalition that includes the FDIC, the IRS, Tax Aid ( a non-profit tax group), United Way of the Bay Area, SF Earn (an Individual Development Account (IDA) group), Boys and Girls Club of San Francisco, and the Federal Reserve Bank of San Francisco offered free tax assistance at 56 VITA sites in Alameda, Contra Costa and San Francisco counties.

In the 23 VITA sites in San Francisco, 339 volunteers this year have prepared 1,148 returns totaling $1.4 million in federal returns and more than $848,000 in EITC and Child Tax Credit refunds.

Two of these VITA sites are located in the Tenderloin and Chinatown districts, which are among the poorest neighborhoods in San Francisco. The sites are a direct result of the FDIC's ongoing efforts to work with financial institutions to deliver Money Smart classes in Chinese in these neighborhoods. Both sites provide service to very low-income clients in English, Cantonese, and Mandarin. This year, volunteers prepared 150 returns for a total of more than $144,000 in federal refunds and $84,000 in EITC refunds.

Last year, more than 10,600 residents of Contra Costa County missed out on an estimated $8.1 million because they did not claim the EITC on their 2002 tax return. This year, a coalition of federal and county agencies, community-based organizations, financial institutions, private foundations, community colleges and labor organizations operated eight new VITA sites in addition to the four established last year in an effort to help low-income families and individuals receive all refunds due them. As of mid-March 2004, 309 returns had been completed, yielding $451,922 in federal refunds.

VITA Site Coordinator Delphine Smith recalls the excitement of one family whose tax returns had been recently prepared at the site in North Richmond, California. The family received more than $6,800 in federal, state, and EITC refunds --- an unexpected windfall that will help them meet their long-term financial goals.

The Alameda County Asset Development Community Partnership was established in summer 2002 with key agencies including the United Way of the Bay Area, Annie E. Casey Foundation, Alameda County Social Service Agency, City of Hayward, Urban Strategies Council, Congresswoman Barbara Lee, the FDIC and HUD. The FDIC is a member of the partnership's Asset Development Committee, formed to promote financial education, resources and classes for EITC recipients in the county.

This year, the Alameda campaign has 21 VITA sites with more than 548 volunteers and interpreters offering help in a total of 21 different languages. As of the end of March, 668 prepared returns have generated $713,725 in tax refunds. The Alameda coalition is also providing information on additional resources such as food stamp registration assistance, a directory of asset development resources and health insurance information at the sites.

The Los Angeles initiative boasts over 80 VITA sites, including ten Mega VITA sites in areas in which predatory lending and fee-based tax preparers are prevalent, including the cities of Inglewood and Riverside, as well as Ventura County. More than 1,000 volunteers are helping clients with their returns during this tax season. The FDIC's Community Affairs staff, in conjunction with other government and non-profit partners, has worked hard to involve banks in VITA partnerships. Personnel from financial institutions ranging from large mega-banks to small community institutions have become trained VITA volunteers. One bank has even volunteered the use of its mobile bank for the VITA effort, and other area banks house VITA sites in their branches. The goal of the partners in the Los Angeles VITA initiative is for low- and moderate-income families to receive the entire anticipated $1.4 billion in EITC refunds and not spend any of it on private tax preparers and refund anticipation loan (RAL) providers.

Atlanta Region: Last year, the two DeKalb County VITA sites (DeKalb Workforce Center and St. Phillips AME Church) operated by the DeKalb Money Smart Model Project prepared 165 returns. Seven were paper returns; 158 were e-filed. Clients received a total of $263,593 in refunds. Sixty-seven clients received $144,205 in EITC refunds.

This year, three VITA sites (DeKalb Workforce Center, DeKalb Cooperative Extension, and St. Phillips) operated by the DeKalb Money Smart Model Project prepared 235 returns as of the end of February 2004.

There are a total of 15 DeKalb County VITA sites, including the three directly operated by the Money Smart Model Project. The goal is to prepare at least 1,000 returns by the close of the 2004 tax season. One of the three VITA sites directly operated by a Money SmartModel Project offers financial literacy classes as well as free income tax preparation. All 15 VITA sites provide information to their clients about Money Smart classes in the area.

In St. Petersburg, FL, the IRS partnered with the FDIC and many other organizations through the Pinellas Wealth Building Coalition to establish VITA sites throughout the community. At the end of February 2004, the IRS reported that the five VITA sites in Pinellas County have prepared 814 tax returns with total refunds of $1.14 million. Of the 814 tax returns prepared, 413 returns included eligibility for the EITC with total refunds of $510,000.

In addition to free income tax return preparation, most of the Pinellas VITA sites show a video introducing the FDIC's Money Smart program and provide information about Money Smart training workshops in Pinellas County.

Chicago Region: The FDIC Community Affairs staff helped established a highly successful pilot VITA site at Holy Cross Church in the Back of the Yards (BOY) neighborhood of Chicago. Last year, the site helped over 1,000 individuals (predominantly Spanish speaking) file tax returns and more than $1.5 million was returned to the community in EITC refunds. The BOY VITA/EITC initiative also offered a Money Smart financial education program, and five local banks were available to open new accounts for working families.

Mayor Richard M. Daley was so impressed with the site's results that he actively promoted the Money Smart financial education and banking pieces of Chicago's VITA/EITC campaign for the 2003 tax season.

Successful VITA sites were also established in Little Village (Piotrowski Park) and Rockford, IL. The Little Village initiative is a cooperative effort between the FDIC, the IRS' Tax Assistance Program and Harris Bank. This initiative is designed to bring Spanish-speaking immigrant populations into the financial mainstream. FDIC Community Affairs staff helped bring these groups together.

In Milwaukee, the FDIC worked with the Milwaukee Asset Building Coalition (MABC) to establish partnerships with banks during this year's tax season. The MABC is a partnership of community organizations, government representatives and agencies, and financial institutions. The Coalition's purpose is to increase EITC claims in Milwaukee County through education and free tax preparation assistance. Initial financial institution partners were Great Midwest Bank and Legacy Bank. In 2003, Bank One, Mitchell Bank, M&I Bank, North Shore Bank, and US Bank became active members in the coalition; US Bank sponsored a VITA site.

The Coalition's goals are to increase awareness and use of the EITC in Milwaukee; expand access to free tax preparation assistance; and increase access to financial literacy training, basic banking services, individual development account (IDA) programs, and other asset-building opportunities. The MABC also encourages refund recipients to use those funds as an initial deposit into an IDA or other deposit account or asset-building tool.

In 2003, the coalition operated 20 VITA sites. 12,050 taxpayers claimed refunds totaling $5,386,580, and one taxpayer at the United Migrant Opportunities Service VITA site received a refund large enough for a down payment and closing costs on a home.

In East Chicago, Gary, and Hammond, Indiana, many local organizations, agencies and banks are participating in the Northwest Indiana Asset Building Campaign (NWIABC) to help increase the overall wealth of lower-income families through the use of the EITC, financial education, and asset building.

2004 is the first tax preparation season for the Campaign. The first VITA site was opened on January 31, 2004, as a "Super Saturday." Taxpayers received free tax assistance as well as exposure to financial education and referrals to other services, such as energy assistance and home ownership seminars. On that day, volunteers completed 28 federal tax returns; refunds for 19 clients were deposited directly into bank accounts. Federal refunds totaled $104,781, with EITC refunds representing $42,993 of the total. The average EITC refund was $1,791.

As part of the "Super Saturday" services to taxpayers, Bank One opened three new checking accounts and one IRA account. They also issued one tax refund to a stored value card for a taxpayer who did not qualify for a regular account because of negative Chex System information. Finally, 10 people attended the financial education workshop, and five signed up for additional financial literacy training.

Dallas Region: FDIC Community Affairs staff continued to work with the Heart of Texas Financial Literacy Coalition (HOTFLC), headquartered in Waco, to provide free income tax preparation, financial literacy classes, and access to asset-building programs.

The Coalition has grown from a small handful of supporters during its first tax season to over 50 local organizations this year. Determined to help the working poor receive the EITC and CTC tax credits due them, the HOTFLC works to raise awareness about this often overlooked but much-needed resource. Last year the HOTFLC group received kudos for increasing the EITC refunds in McLennan County by $3 million.

Still, it is estimated that for the six-county Heart of Texas area, nearly $23 million in EITC refunds went unclaimed during the last tax season. The Coalition aims to change that by continuing to add volunteers who are willing to post fliers and educate employees.

In its first tax season, HOTFLC developed strategies to partner with numerous social service groups to promote free tax preparation sites, financial literacy and asset building. This year the group made a presentation to the Greater Waco Chamber of Commerce about the Advance Earned Income Credit, which allows qualifying taxpayers to get their extra money in each paycheck. Since this could represent a total of more than $4,000 for a family with more than one child, the benefits are potentially enormous.

The Coalition is urging employers to set up their own awareness programs by downloading a "tool kit" of fliers, posters and paycheck stuffers from Corporate Voices for Working Families at www.cvworkingfamilies.org. The Advance Earned Income Credit can be set up at any time during the year.

Kansas City Region: The Community Affairs Officer in Kansas City writes that "for the last three years, FDIC Community Affairs staff has helped struggling folks get their taxes done. We've teamed up with the Internal Revenue Service (IRS), nonprofit groups and financial institutions to sponsor eight Volunteer Income Tax Assistance (VITA) sites in the Kansas City metro area.

Often, individuals who qualify for EITC and CTC credits don't file a return. They may think their small earnings don't require them to file a return, or the tax filing process intimidates them, or they lack information about VITA.

If the VITA program didn't exist, many more taxpayers would fall prey to refund anticipation loans (RAL). A Refund Anticipation Loan is a short-term loan on an anticipated tax refund offered by certain paid tax preparers. On average, a taxpayer requesting a RAL will pay $252 (including the fees to prepare the return) on a $2,100 refund. It is estimated that tax refund loans drained more than $1 billion dollars from workers nationwide in 2002.

Taxpayers often request RALs because they need money quickly to pay bills. They don't realize that if they visit a VITA site, their refund would be deposited directly in their bank accounts in less than two weeks. Local VITA efforts have recruited banks to open accounts for tax preparation clients. The FDIC Community Affairs staff assists in these efforts.

VITA volunteer work is hard, but immensely rewarding. As an FDIC volunteer said: 'I found this one of the most rewarding volunteer efforts I have ever had the privilege of undertaking. The people that we are able to assist are, for the most part, very grateful and appreciative of the help. It really makes me feel like I am helping people in not only understanding basic tax law but in assisting them receive what they entitled to by law. I have helped the blind, the disabled, and the elderly; single parents; and young students. Each return is a little different. At the end of the evening you know you have made a difference and that feels great.'"